Arbitration Act 2025: What You Need to Know ⚖️

Hey there! 👋

The Arbitration Act 2025 has just received Royal Assent, bringing the biggest changes to English arbitration law in nearly 30 years. This new legislation is set to transform how disputes are resolved.

Let’s dive into what’s happening and how law firms could be affected.

Don't have time for the full scoop? No worries, we've got you covered with a quick summary: click here

What is arbitration? 🤔

Arbitration is a way to resolve disputes outside of court, often by including an arbitration clause in the contract. Instead of a judge, an independent (neutral) person called an arbitrator listens to both sides and makes a decision. It's often faster and more flexible than going to court, and the decision (called an award) is usually final and binding. They are also generally private and confidential, which can be a significant advantage for those who prefer to keep their disputes out of the public eye.

Why does it matter? 😆

The Arbitration Act 2025 introduces several key reforms to make arbitration more efficient and transparent. Here are some of the most important changes:

Clear Rules on Governing Law

• Previously, there was uncertainty around which law governed the arbitration agreement, especially when the contract's governing law differed from the arbitration's seat. Now, unless the parties agree otherwise, the law of the place where the arbitration is held (the seat) will govern the arbitration agreement. This change helps clear up any confusion about which laws apply.

Arbitrators Must Disclose Potential Conflicts

• Arbitrators must now disclose any information that might make people doubt their impartiality. This rule is meant to ensure that arbitrators are fair and unbiased.

Protection for Arbitrators

• Arbitrators are now protected from liability for their resignation unless it is shown to be unreasonable. They are also shielded from cost liabilities in removal applications unless they have acted in bad faith. This aims to protect arbitrators from undue pressure and encourage fair decision-making.

Faster resolutions of unfounded claims

• The Act gives arbitrators the power to dismiss claims or defences that have no real prospect of success without a full hearing. This aims to make the arbitration process more efficient, thereby reducing costs.

Emergency Arbitrators

• The Act formally acknowledges the role of emergency arbitrators, granting them powers similar to those of regular arbitrators. This ensures that urgent matters can be addressed promptly, even before a full tribunal is constituted.

What are the broader impacts? 🧐

With clearer rules and more transparency, businesses might feel more confident choosing arbitration over going to court. This increased confidence can lead to more companies opting for arbitration as their preferred method of dispute resolution.

These reforms allow arbitration to be faster and cheaper for businesses. This is particularly beneficial for small and mid-sized businesses that may not have the resources to engage in lengthy and expensive court battles.

The Act is intended to strengthen the UK’s position as a leading place for arbitration. This could attract more international disputes to be resolved in London, which boosts the economy.

How could a law firm be affected? 👩‍⚖️

• The reforms are expected to make arbitration a more attractive dispute resolution option, potentially increasing the number of clients seeking arbitration services. This could generate more work for dispute resolution teams, resulting in higher revenue and demand in this area.

• Existing arbitration agreements may need to be reviewed and revised to align with the new statutory rules. This could be a significant task, especially for firms with a large number of clients and contracts.

• Law firms need to explain the changes brought by the Arbitration Act 2025 to their clients to ensure they understand the new rules and how they affect their arbitration agreements.

🗞 Other news…

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Nvidia sues EU antitrust regulators ⚖️

Nvidia has filed a lawsuit against EU antitrust regulators, challenging their authority to review smaller acquisitions. The case stems from the EU examining Nvidia's purchase of AI startup Run:ai last year after an Italian request, despite the deal falling below normal revenue thresholds. While the acquisition was eventually approved, Nvidia argues the regulators overstepped their bounds following a court ruling that had already limited their powers. The outcome could significantly impact how the EU scrutinises tech mergers going forward.

I hope you enjoyed this article. See you next week! 👋

Written by Chirag Morar